Local council corruption and secrecy rampant

From Auckland to Southland incredible stories of malfeasance and backroom deals by Council officials have reached an alarming scale.  Public money gone missing, council officials awarding contracts to their mates and privately selling off public assets, bureaucrats refusing to provide elected representatives records on the most rudimentary expenditures and a shroud of impervious secrecy over council business, all increasingly typify the status quo.

Even Transparency International New Zealand, a secretive chapter comprised of government bureaucrats, rife with its own conflicts of interest and 96% funded by NZAID, concedes there are two areas where NZ fails to meet basic international standards.  On whether the executive makes available to the public a report on what steps it has taken to address audit recommendations or findings that indicate a need for remedial action; and on whether the National Audit Body or the legislature publishes a report that tracks actions taken by the executive to address audit recommendations, NZ scores a ‘D’.

The impotence of the Ombudsman and Auditor General is evident not only in their near universal failures to act but in their often apologist rationalizing of incontrovertible audit discrepancies in cases where their findings are made known.  Former Auditor General Kevin Brady, for one, had an unflappable faith that all bureaucrats acted nobly.  He regularly refused to concede that the irregularities crossing his desk were anything other than “typos”.   In 2007, his office monitored an internal audit by Gore District Council which determined Council acted appropriately – but added “this could not be proved conclusively because of the poor quality of record keeping.”  At the same time, Mr Brady’s most prized role was giving powerpoint presentations on New Zealand’s lack of corruption relative to other countries in the region.  Perhaps this is simply a reflection of these other countries keeping better records of their financial affairs.

It may be that his successor Lyn Provost has lowered the bar still.  Late last year she could not escape finding that four Canterbury Regional Councillors breached the governing statute when voting on matters where they have a financial interest.  The Auditor General nonetheless “decided that a prosecution would be unlikely to result in a conviction and that it would not be appropriate in these circumstances to seek to have the councillors prosecuted.”

Attempting to peel away the shroud obscuring business of many local councils is commonly frustrating and extremely time consuming.  Official Information Act requests are often stymied by council claims that the subject is commercially sensitive – or privileged based upon some ‘legal opinion’ which itself is too secret to merely divulge who wrote it.  In the case of Gore District Council, Chief Executive Steve Parry has claimed OIA requests are not only “frivolous or vexatious” but, according to a resolution, those making them could be deemed a ‘significant hazard under s39 of the Heath and Safety Act’ due to the emotional stress such requests provoke .  He has refused to provide a copy of his employment contract to elected council representatives and ducked and dodged questions regarding his quiet sell-off of public property at bargain prices and payment of over $340,000 in severance payments to employees let go because they were uncomfortable with conducting council business in his implacable style.

This would be bad enough if it was unique to Gore.  Far from it.  Auckland City Council has only marginally improved from the last administration when mayoral candidate Lisa Prager exposed a $4 million discrepancy in a reported surplus in the 2006/2007 annual audit.  Expenditures to private contractors totaling hundreds of millions of dollars are still deemed too commercially sensitive to divulge to the ratepayers footing the bill.  Contracts up to $1 million get assigned without competitive bid.

In Waitakere City, staff with legislative duties for dog and stock control have been diverting public resources for the private gain of a sham trust headed by the manager of animal welfare.  Correpondence shows that trustee made a proposal to the NZ government in 1999 that Waitakere assets be transferred into the unincorporated trust and that the contract with North Shore City to provide animal care and control be assigned to it.  A complaint to the Auditor General concerning the obvious fraud went nowhere.

In Carterton District Council, malfeasance through the Carterton Community Centre resulted in a formal Police complaint.  The evidence, as well as the several lawyers and auditors reporting the financial misconduct were marginalized.  Then Area Controller of the police Rod Drew showed his willingness to put form before substance, foregoing an investigation and declaring that because council members and former MP Georgina Beyer “have recently discussed issues around the closing of the Centre… the actions of the ‘elected’ officers of the Centre are most unlikely to have breached any Criminal Law.”  Drew’s emphasis on ‘elected’ is odd because It was not the ‘elected officers’ who were accused of a crime.

In the Horowhenua, the council made a secret decision to avoid required consultation and double the expenditure on a new council building.  The Auditor General found nothing wrong.  In another example, the chief executive claimed a legal opinion condoned the extraordinary expenditure from a multi-million dollar freeholding fund.  The Chief Ombudsman agreed with the CE that this legal opinion could not be viewed by councillors.  Finally, the Audit Office reported that credit cards are being used by staff indiscriminately, financial review procedures are lacking and that works projects are being approved above staff member’s delegated authority – including the mayor’s company receiving a contract which exceeded the amount approved by the Auditor-General.  Council bureaucrats dismissively replied that staff are trustworthy enough not to personally exploit these situations.

In Tararua District Council, the furtive sale of a 50 acre tract of land in 2003 that saw some local officials directly benefit financially prompted a court battle by Woodville community advocate Jay Reid.  He now publishes a monthly newsletter which seeks to shed light on what is actually occurring at the local council.

And Minister of Local Government Rodney Hide claims to know none of this.  Kiwisfirst approached him in September for comment regarding some of the suspect local government financial practices which this website has been approached with.  Mr Hide professed not to be aware of any of it.  Detailed examples from three local councils were then posted to him with request for his comment.  Mr Hide has failed to respond to this and a follow-up phone call.